Yes, it happens. Sometimes there is a mistake, and privileged or confidential documents are inadvertently disclosed to the other side. When that happens, crucial ethics questions arise, and they have very serious consequence.
But before discussing all that, let's take a brief look at the privileges and doctrines that that may be in play.
When a client meets with an attorney to discuss a legal matter, that client has a right to keep the conversation with his or her attorney confidential. This right is called the attorney-client privilege. The privilege belongs to the client and discovery of the communication is barred, even when the communication includes unprivileged material. See Cal. Evid. Code §§ _950-962.
Attorney Work Product
Similarly, an attorney's work product is not discoverable even though, technically speaking, it is not protected by a privilege as such. It is protected by a doctrine that stems from a landmark case decided over 70 years ago.
The case in question was a wrongful death claim field in Pennsylvania. See Hickman v. Taylor, 4 F.R.D. 479 E.D. Pa. 1945). The plaintiffs had send an interrogatory to defense counsel requesting two things: (1) a copy of the witness statements procured by the attorney that were in writing, and (2) for the attorney to reduce the oral statements to writing and produce those statements.
Defendant's counsel refused to produce this information and the trial court found the defendant's counsel in contempt.
On appeal, the Third Circuit reversed, stating that the information sought was part of the "the results of the lawyer's use of his tongue, his pen, and his head, for his client..." Hickman v. Taylor, 152 F.2d 212, 223 (3d Cir. 1945). In short, the information was protected and not discoverable. The appellate court noted that the phrase "work product of the lawyer," argued by one of the attorneys, "seems pretty well to describe what we are after... [and it] does with fair accuracy describe what we are excluding here under the term privilege" stated the appellate court. Id.
The dispute did not stop there. This case was appealed to the United States Supreme Court.
The nation's high court affirmed the Third Circuit decision and in so doing held that the information sought was not discoverable. In affirming this decision, the Supreme Court stated that in preparing a client's case, an attorney's work "in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways [was] aptly though roughly termed by the Circuit Court of Appeals in this case as the 'workproduct of the lawyer'" Hickman v. Taylor, 329 U.S. 495, 510-511 (1947).
The Hickman case has been part of law school evidence texts ever since.
In California, the principles that were established in Hickman are codified in a discovery statute stating that "a writing that reflects an attorney's impressions, conclusions, opinions, or legal research or theories is not discoverable under any circumstances." Cal. Code Civ. Proc. § 2018.030.
Duty of Confidentiality
Parallel to the attorney-client privilege and the work product doctrine is a much broader duty: that of confidentiality. It reaches further because it applies to information about the client, whatever its source. See generally Cal. Bus. & Prof. Code §6068(e)(1)("It is the duty of an attorney... To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client").
The Problem of Inadvertent Disclosure
As noted above, there are times when an opposing attorney makes a mistake and inadvertently discloses protected documents - items that may be covered by the attorney-client privilege or the work product doctrine. As we shall see, several cases explore this problem and what to do when it happens.
One of the seminal cases in this area is State Comp. Ins. Fund v. WPS, Inc., 70 Cal.App.4th 644 (1999). It is generally considered to be "the case" regarding the unauthorized possession of privileged documents. In fact, the rules set forth in that case have come to be known simply as the "State Fund Rules" and/or the "State Fund Duties."
In State Fund, pursuant to a discovery request, an insurance company produced approximately 7,000 pages of documents that included, inadvertently, 273 pages of confidential "Civil Litigation Claims Summary" forms prepared by employees of the carrier.
When counsel for State Fund realized that the confidential documents had been inadvertently produced, a request was made for the return of the documents. It was denied by opposing counsel. A motion followed, and at the hearing, the trial court found that the documents were indeed privileged and that they had been inadvertently produced. The court held that the inadvertent disclosure did not waive the privileged status of the materials.
In affirming that ruling, the court of appeal held that when a lawyer receives materials that appear to be confidential and privileged, and where it is reasonably apparent that the materials were provided or made available through inadvertence, that attorney must:
1.Refrain from examining the materials any more than is essential to ascertain if the materials are privileged,
2.Immediately notify the sender that he or she possesses material that appears to be privileged, and
3.Notify the party entitled to the privilege of that fact.
See State Fund, supra, 70 Cal.App.4th at 654-655.
After State Fund
The cases that followed State Fund further explained and expanded these concepts.
•Rico v. Mitsubishi Motors Corp., 42 Cal.4th 807 (2007): the California Supreme Court held that the obligations set forth in State Fund were the standard and communications or materials protected by the attorney work product doctrine were also included, such as an attorney's strategy session notes. See Rico, 42 Cal.4th at 817-818 n. 9.
•Laguna Beach County Water Dist. v. Superior Court, 124 Cal.App.4th 1453 (2004): the court held that an attorney's work product "is not limited to writings created by a lawyer in anticipation of a lawsuit. It applies as well to writings prepared by an attorney while acting in a nonlitigation capacity." Laguna Beach, 124 Cal.App.4th at 1461.
•Costco Wholesale Corp. v. Superior Court, 47 Cal.4th 725 (2009): the state supreme court stated that a party need not disclose a confidential communication to the court as part of the process to obtain a ruling on confidentiality. Costco, 47 Cal.4th at 734. Moreover, information protected by the attorney-client privilege does not lose its protected status because it contains material that could be discovered by some other means. 47 Cal.4th at 731-732.
•Clark v. Superior Court, 196 Cal.App.4th 37 (2011): the court of appeal stated that the State Fund rules apply to an attorney who has possession of opposing counsel's privileged documents because his client gave them to him. As the court observed: "[T]he plaintiff stole some of his employer's privileged documents when the employer fired him, and then provided the documents to his attorney for use in the plaintiff's lawsuit against the employer." Clark, 196 Cal.App.4th at 42-44. The court applied the State Fund rules even though the privileged documents were stolen from opposing counsel's company as opposed to having been inadvertently disclosed. Id. at pp. 52-54.
•And finally, the most recent case, McDermott Will & Emery LLP v. Superior Court, 10 Cal.App.5th 1083 (2017): the trial court found that if a privileged communication or document is inadvertently given to a third party, the privilege is not waived on that basis. McDermott, 10 Cal.App.5th at 1103-1104.
The McDermott case is important and bears further discussion. The case involved an intra-family dispute over various property interests. An individual named Richard P. Hausman, Sr. (Dick) received a confidential email from his personal attorney containing the attorney's notes of a meeting and legal advice to Dick regarding Dick's options to resolve his case. Dick forwarded this email to his sister-in-law, who then forwarded the email to her husband, Gavin. It appears that Gavin then handed out copies of the email at a meeting attended by persons on the other side of Dick's lawsuit and then sent a copy of the email to the attorney who had drafted the trusts, which were the subject of the original dispute.
Thereafter, an attorney in another action who was representing one of the opposite party's in Dick's lawsuit, found a copy of the email in documents supplied by his client. When he notified Dick's attorney, he found out that Dick's attorney did not agree that the email had lost its privileged status. A dispute arose as to whether Dick waived his right to claim the attorney-client privilege by inadvertently disclosing the subject email to a third party.
The trial court found that there was substantial evidence proving that Dick's disclosure was inadvertent and unintentional. The court of appeal agreed that the privilege was not waived by an inadvertent disclosure. See McDermott, 10 Cal.App.5th at 1100-1105. McDermott expanded the State Fund rule to include the inadvertent disclosure of confidential documents to third parties; such a disclosure does not waive the attorney-client privilege.
Consequences for Noncompliance
In the seminal State Fund case, the trial court found that the conduct in using confidential information was "contrary to the ethical standards governing the legal profession" and imposed monetary sanctions for this use. State Fund, supra, 70 Cal.App.4th at 647. And although the "death penalty" sanction of disqualification had been requested, the trial court did not grant it.. On appeal, the appellate court agreed in principle with the trial court's monetary sanction order, but felt compelled to reverse because there was "no established California law governing what the obligation of a lawyer is upon receiving obviously privileged materials through the inadvertence of another." State Fund, supra, 70 Cal.App.4th 648. In words that have proved prophetic, the court added that "this opinion provides a standard for future application by lawyers confronted with a predicament comparable to the one presented here." Id.
In Aerojet-General Corp. v. Transport Indemnity Insurance, 18 Cal.App.4th 996 (1993), plaintiff's attorney who was suing liability insurers in a dispute over insurance coverage, inadvertently received documents originating from defendants' attorneys, including a memorandum revealing the existence of a witness whom he subsequently deposed. Because plaintiff's attorney did not immediately inform opposing counsel that he received this memorandum, defendants requested sanctions. The trial court granted them, "directing the attorney's firm to pay all expenses incurred by defendants in bringing the sanction motion and in conducting discovery to determine how the disclosure occurred." Aerojet-General, 18 Cal.App.4th at 1002. However, since the sanctions' award was granted to reimburse the respondents for the cost of filing the motion, the appellate court reversed, finding no clear statutory, regulatory or decisional authority imposing a duty of immediate disclosure of the inadvertent receipt of privileged information. See 18 Cal.App.4th at 1006-1007. There was no request for attorney disqualification in Aerojet-General.
The Ultimate Sanction: Disqualification
In the Rico case, opposing counsel (A1) had the strategy session notes that belonged to opposing counsel (A2). When A2 realized that A1 had the only copy of his strategy session notes and had used those notes at a deposition, A2 filed a motion to disqualify A1's legal team and their experts on the ground that they had become privy to his work product and unethically used the notes.
The trial court in Rico concluded that the notes were absolutely privileged by the work product rule. In affirming, the California Supreme Court held that the disqualification remedy was proper because: (1) of the damage caused by the dissemination of the privileged information, (2) A1's failure to follow the clearly established State Fund rules, and (3) A1 acting unethically in making full use of the confidential material. See Rico, supra, 42 Cal.4th at 810, 819.
A similar result occurred in the Clark case. There the court noted that disqualification: (1) is proper to prevent future prejudice to the opposing party from information the attorney should not have possessed; and (2) necessary where unauthorized possession of privileged documents can affect the outcome of the proceedings. See Clark, supra, 196 Cal.App.4th at 55.
Along the same line of reasoning, in People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135 (1999), the state supreme court stated that disqualification motions may be ordered if an attorney mishandles confidential communication that mistakenly fall into his or her hands. "Protecting the confidentiality of communications between attorney and client is fundamental to our legal system. The attorney-client privilege is a hallmark of our jurisprudence that furthers the public policy of ensuring "'the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, in order that the former may have adequate advice and a proper defense." SpeeDee, supra, 20 Cal.4th at 1146 (quoting Mitchell v. Superior Court, 37 Cal.3d 591 (1984)).
And finally we come full circle to the recent McDermott case. There, the court held that a lawyer or a law firm must be disqualified and prohibited from representing their client when the State Fund rules are not followed. The trial court in McDermott stated if a recipient of inadvertently disclosed documents uses the documents deciding unilaterally that the privilege has been waived, the recipient runs the risk a court will draw a different conclusion - and the attorney who took the risk will be disqualified for violating the State Fund rule. See McDermott, supra, 10 Cal.App.5th at 1113-1114.
That is exactly what happened. The law firm was disqualified for wrongfully assuming that the privilege had been waived because the trial found that the disclosure was inadvertent and unintentional and for those reasons, the privilege had not been waived.
The State Fund rules, handed down and endorsed by the highest court in California, are powerful maxims for every lawyer to live by. As the McDermott case demonstrates, disobedience raises the prospect that the offending lawyer will be disqualified and unable to represent his or her client. That is a heavy sanction, but mishandling privileged documents is a heavy act.
If you think you are in possession of privileged material that has been disclosed inadvertently, there is one thing you should do: stop. Put the material in a sealed envelope. Notify your opponent. And proceed to court for a ruling on who has the right to see the items in question.
If you proceed to make use of the materials without such a ruling, you run the risk of being tossed out of the case and having to have a very painful discussion with what most likely will be your former client.
L. W. Greenberg was a sole practitioner in San Diego for twenty-years before retiring from the practice of law. She currently teaches paralegal classes at the University of San Diego and Southwestern Community College in Chula Vista. Ms. Greenberg has published several paralegal books and textbooks including The California Paralegal Workbook: Essential Legal Skills; The 2017 Edition of California Family Law Handbook for Paralegals; California Family Law Judicial Council Forms Workbook for Paralegals; and the California Paralegal Ethics Handbook.